Secured Loan: Getting a loan with more affordable rates is the desire of many people who need credit. In this context, a secured loan emerges as an advantageous option, especially for those who own an asset such as a car or property. After all, by offering a guarantee to the financial institution, the customer conveys more security and, as a result, obtains more favorable conditions.
In this article, you will understand how secured loans work, what types are available, the main precautions to take before taking them out and, most importantly, when this option is really worth it. Continue reading to make an informed decision and avoid unnecessary risks.
What is a secured loan?
A secured loan is a type of credit in which the applicant offers an asset as security to the bank or financial institution. This asset can be a car, a property or even a salary. In exchange, the institution offers lower interest rates and longer repayment terms.
Because it involves an asset as collateral, the risk of default is reduced. Therefore, this type of credit is usually approved more easily and under better conditions. However, it is important to remember that, in the event of default, the asset may be repossessed by the creditor.
Main types of guarantee
1. Loan secured by property
Also known as home equity, this option allows you to use a paid-off property as collateral. It is a recommended alternative for those who need higher amounts and can temporarily compromise the property.
Advantages:
- Rates starting from 0.9% per month.
- Long terms, which can reach 240 months.
- The amount released can reach up to 60% of the property value.
Disadvantages:
- Bureaucratic process, with property evaluation.
- Risk of loss of the asset in case of default.
2. Loan secured by vehicle
This type of credit uses a paid-off car as collateral. It is generally a more affordable option, as the process is quicker and simpler than using real estate.
Advantages:
- Rates starting from 1.49% per month.
- Faster approval.
- Possibility to continue using the car normally.
Disadvantages:
- The amount released is usually lower (around 70% of the vehicle’s value).
- Risk of losing the car in case of default.
When is it worth opting for a secured loan?
This modality is recommended for those who:
- Need higher values.
- Look for lower interest rates.
- Want longer terms to pay.
- You have a paid-off asset and do not intend to sell it.
Precautions before hiring
In order to avoid future problems, pay attention to some important points:
- Assess your payment capacity: Never commit more than 30% of your income.
- Read the contract carefully: Make sure there are no hidden fees.
- Check the institution’s reputation: Choose banks or fintechs with good reviews.
- Consider the unexpected: Have an emergency fund.
Final considerations
A secured loan can be an excellent option for those who need credit with more affordable conditions. Both a car and a property are valid alternatives, as long as the borrower is aware of the risks involved.
Therefore, carefully analyze your finances, compare offers and choose responsibly. Using an asset as collateral is a serious decision, but it can open doors to greater opportunities when done with planning and security.
Keep following our articles for more information on conscious credit and financial education.